Employee's Compensation Insurance

The Covers Under an Employee's Compensation Policy

Table A

Covers the employer's liability for employees who fall within the compensation Act (the courseware's 'workmen'), under that Act, the Fatal Accidents Act, 1855 and common law.

Table B

Covers liability under the Fatal Accidents Act, 1855 and common law only, for employees who are not workmen under the Act. It exists because some staff fall outside the statute but can still sue the employer for negligence.

Medical expenses extension

Adds the cost of treating an injured employee, up to a stated limit, on payment of extra premium.

Occupational disease extension

Covers diseases the law links to particular jobs (for example lung disease among workers exposed to dust). Without it, many wordings cover accidents only.

Contractors' workers

A principal employer can be liable for workers employed through a contractor. The policy can be extended to cover them, named or by number and wages.

How the Premium Is Worked Out

Wages, not sum insured, are the exposure. The compensation the law sets is tied to the worker's wages, so the premium is too.

1. 1

   Classify employees by occupation

   A press operator, a driver and a clerk carry very different accident risk, so each category has its own rate.

2. 2

   Estimate annual wages per category

   The proposal states the number of employees and estimated wages for the year.

3. 3

   Apply the rate to wages

   Rate per ₹100 or per mille of wages for each category, plus any extensions.

4. 4

   Adjust at expiry

   The policy is often issued on estimated wages and adjusted on the actual wage declaration at the end of the year: extra premium if wages were higher, a refund if lower, subject to any minimum premium.

What the Policy Will Not Pay

• check_circleInjury not arising out of and in the course of employment.
• check_circleLiability the employer has taken on by contract beyond what the law imposes.
• check_circleInjury to employees of a contractor unless the policy is extended to cover them.
• check_circleWar, nuclear risks and, in many wordings, injury caused by the employee's drunkenness or wilful disobedience of a safety rule, mirroring the defences the statute itself gives the employer (section 74(1) of the Code: drink or drugs, wilful disobedience of a safety rule, or removing a safety guard, except where the injury causes death or permanent total disablement).

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